Is There an Easy Fix for America's Budget Problem?

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Is There an Easy Fix for America's Budget Problem?

Postby Bruce Gourley » Sat Feb 06, 2010 10:57 am

Fareed Zakaria says yes, Washington can easily conquer the national debt in the coming years ... but politicians are more interesting in raising more money for internal warfare against one another than in being responsible stewards of our nation's resources.
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Re: Is There an Easy Fix for America's Budget Problem?

Postby KeithE » Sat Feb 06, 2010 4:20 pm

Bruce Gourley wrote:Fareed Zakaria says yes, Washington can easily conquer the national debt in the coming years ... but politicians are more interesting in raising more money for internal warfare against one another than in being responsible stewards of our nation's resources.


-Get out of all foreign wars = $160B/year at least (and untold funds for returning vets with problems); it also means more soldiers pay is spent here.
-Rescind the Bush Tax Cuts for those over $100k/year taxable income (not just $250K/year)
-Enforce Corporate taxes (most Fortune 500 pay zilch); disallow offshoring.
-End Mortgage deduction (as Zakaria recommends)
-Cut the allowable drug costs by 30% (I'm getting most of mine from Canada at 60% of the cost of my co-pays!) and disallow advertising which is 39% of pharmaceuticals costs.
-Tort reform to limit needless precautionary tests.

This is not easy; but I betcha that would almost make up for the budget shortfall.
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Re: Is There an Easy Fix for America's Budget Problem?

Postby KeithE » Sat Feb 06, 2010 4:24 pm

And Bruce having a new forum is good for those who do not want to be bothered by politics. But politics is often a moral issue.
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Re: Is There an Easy Fix for America's Budget Problem?

Postby Dave Roberts » Sun Feb 07, 2010 6:03 pm

Another help for the federal budget would be to extend Social Security taxes to all income, not just to the first $108K. Why should the guy making $1-million a year get exception on $900K of that amount? That should be taken to court as discrimination against those who make less to have to pay on all their earnings.
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Re: Is There an Easy Fix for America's Budget Problem?

Postby Jonathan » Sun Feb 07, 2010 9:14 pm

Dave Roberts wrote:Another help for the federal budget would be to extend Social Security taxes to all income, not just to the first $108K. Why should the guy making $1-million a year get exception on $900K of that amount? That should be taken to court as discrimination against those who make less to have to pay on all their earnings.


Does that go both ways? Should the fellow making minimum wage pay the same income tax rate as the guy making $1million a year?
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Re: Is There an Easy Fix for America's Budget Problem?

Postby Jonathan » Sun Feb 07, 2010 9:21 pm

Rep. Paul Ryan (R-Wi) has a very compelling plan to address the budget problem: A Roadmap for America's Future, 2.0
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Re: Is There an Easy Fix for America's Budget Problem?

Postby KeithE » Sun Feb 07, 2010 11:23 pm

Dave Roberts wrote:Another help for the federal budget would be to extend Social Security taxes to all income, not just to the first $108K. Why should the guy making $1-million a year get exception on $900K of that amount? That should be taken to court as discrimination against those who make less to have to pay on all their earnings.


Good idea Dave.
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Re: Is There an Easy Fix for America's Budget Problem?

Postby KeithE » Sun Feb 07, 2010 11:33 pm

Jonathan wrote:Rep. Paul Ryan (R-Wi) has a very compelling plan to address the budget problem: A Roadmap for America's Future, 2.0


I'll read it when I get a chance.
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Re: Is There an Easy Fix for America's Budget Problem?

Postby Dave Roberts » Mon Feb 08, 2010 12:14 pm

Jonathan wrote:
Dave Roberts wrote:Another help for the federal budget would be to extend Social Security taxes to all income, not just to the first $108K. Why should the guy making $1-million a year get exception on $900K of that amount? That should be taken to court as discrimination against those who make less to have to pay on all their earnings.


Does that go both ways? Should the fellow making minimum wage pay the same income tax rate as the guy making $1million a year?


Only if all deductions are eliminated and all shelters and perks are eliminated.
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Re: Is There an Easy Fix for America's Budget Problem?

Postby ET » Mon Feb 08, 2010 2:09 pm

No, there is no easy fix. Might be better to find an economist instead of a foreign affairs guy when talking budget issues, however. He leaves out the fact that there were never any "surpluses" during Clinton's years, just as there were no "cuts" when Republicans took control of Congress, only reductions in the size of budget growths. Those mythological "surpluses" were nothing more than surplus social security funds raided and added to the general budget in order to mask the true size of the deficit, sort of like borrowing from your 401(k) account to pad your overdrawn checking account then proclaiming that you have "surplus" funds available to pay down the credit card. :roll:

I think it's also time to raise the retirement age to 65 or 70, maybe 75. When SSI was first formed, only a small percentage of folks lived long enough to draw from it for any length of time (this still holds true for a large segment of the black population). With life spans today, a large number of people (particularly women) can burden the system for almost as many years as they put into it. Both my grandmothers along with my great aunt got social security for more than 20 years, although I will note I believe they worked until close to 70, being school teachers. My parents are probably close to 10 years on SS, and from statistical information they may end up spending close to 1/4 of their lives drawing from funds provided based on the labor of my wife, myself and even two of their grandchildren at the moment.

The problem with this issue is our addiction to government programs and solutions -- our "addiction to foreign oil" pales in comparison. It's not nearly as sexy or "compassionate" to balance the budget or pay down debt as it is to get elected to office by telling your constituents that you're going to hand out goodies to them, usually with the implication that some who are not paying enough will be paying for those goodies.

But from scanning Ryan's proposal, he's got some good ideas, although there are major hurdles to clear for it to ever be implemented. With trial lawyers being significant contributors to one of the parties (notice there are no parts in any health care legislation dealing with them), the attempt to reign them in would be monumental. I would venture to bet it would be a huge fight to abolish the mortgage interest deduction even if a panel of economists testified before Congress that its abolition would lessen home prices and might even lower interest rates or just simply would result in the majority of people paying less in taxes.

We should also abolish public-sector unions. The compensation and benefit plans are in many places ridiculous. For example, in Vallejo, California, the average firefighter salary was $171,000. One could store up unused vacation and leave time and get a check. One did so to the tune of $370,000. After five years, police and firefighters are guaranteed lifetime health benefits, which might mean that somebody that worked for only 25 years or so burdens the taxpayers with 25 years or health insurance coverage when that employee moves on and is no longer providing those police or firefighter services to the community. Vallejo, CA voted for bankruptcy back in May '08 because of such outrageous compensation packages and liabilities for pensions that they could not meet. In San Diego, fireman can (or could) retire at 50 with 90 percent of their salary. That's the insidious thing about the arrangement. The ones that make these agreements don't have to worry about when the bill comes due, especially when it's a lot further down the road than the next election or maybe even the next generation.

Personally, I doubt the moral fiber of most Americans to deny themselves the benefits of things for which they want in order to take a longer view of a more stable economy for their children and grandchildren.
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Re: Is There an Easy Fix for America's Budget Problem?

Postby Sandy » Mon Feb 08, 2010 3:45 pm

Jonathan wrote:
Dave Roberts wrote:Another help for the federal budget would be to extend Social Security taxes to all income, not just to the first $108K. Why should the guy making $1-million a year get exception on $900K of that amount? That should be taken to court as discrimination against those who make less to have to pay on all their earnings.


Does that go both ways? Should the fellow making minimum wage pay the same income tax rate as the guy making $1million a year?

No, because someone who has earned $1 million a year has benefitted to a far greater degree from the infrastructure, monetary and banking "infrastructure," interest rates and other government fiscal policy than the minimum wage earner has, and thus, should pay for a greater share of the benefit. At least, that's the theory. The fact is that most of those who earn $1 million or more a year pay for a far lesser percentage of those benefits and that infrastructure on a per-capita basis as the middle class, which also provides most of them with their profit margin.

Cutting out the loopholes and deductions would be fair, and utilizing a form of consumption tax would be even more so, because those who did benefit the most from the things provided by taxes would pay the most for the benefits. It would also take care of a large percentage of the deficit, and the debt. Steve Forbes, where are you now?

Keep in mind that the war in Iraq cost $3 trillion, that a large part of that, and other accumulated debt, was borrowed from China by George W. Bush, and that what the Republicans in Congress are proposing to bring about economic growth is more of the same fiscal policy which brought about economic disaster in the first place. So going back is also not an option. It may be hard for people to catch on, but the fact of the matter for the US in the 20th century has been that Democratic presidential administrations and policies have presided over, and brought about periods of sustained economic prosperity while the GOP has presided over and brought about recession. So I would say that the fix, which won't be an easy one, would be to stand firm with Obama's policies, which have already initiated significant economic progress (4,000+ points gained on the stock market in just over a year).
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Re: Is There an Easy Fix for America's Budget Problem?

Postby Jonathan » Mon Feb 08, 2010 5:41 pm

Jonathan wrote:Does that go both ways? Should the fellow making minimum wage pay the same income tax rate as the guy making $1million a year?

Sandy wrote:No, because someone who has earned $1 million a year has benefitted to a far greater degree from the infrastructure, monetary and banking "infrastructure," interest rates and other government fiscal policy than the minimum wage earner has, and thus, should pay for a greater share of the benefit.


You'll have to explain how the person earning more has benefited to a far greater degree. The infrastructure is there for both those who produce and those who do not. Having all paying the same rate still results in those who earn more paying a greater share of the total tax collected.

Sandy wrote:Keep in mind that the war in Iraq cost $3 trillion,


Where are you getting $3 trillion? The most generous price tag for both wars since 2001 is now just over $1 trillion...and that's a 9 year price tag. The Obama administration has pushed through a greater debt than that in a single year.

Sandy wrote:(4,000+ points gained on the stock market in just over a year).


So President Obama's policies caused the 4000 pt increase in the Dow? How so?
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Re: Is There an Easy Fix for America's Budget Problem?

Postby Sandy » Tue Feb 09, 2010 11:40 pm

Jonathan wrote:You'll have to explain how the person earning more has benefited to a far greater degree.


A person earning $1 million has earned far more money than the person earning minimum wage, and thus, has benefitted to a greater degree from what tax support has provided for him to earn the money. That's pretty simple. I realize that conservatives think it is grossly unfair for wealthy people to pay anywhere close to their fair share of taxes, simply because they can influence the politics to keep that from happening, but the more money you earn, the more you have benefitted from the infrastructure and the finance laws.

Jonathan wrote:Where are you getting $3 trillion?


That's what the GAO says, when it calculates direct expenditures for the two wars, and other related costs.

Jonathan wrote:So President Obama's policies caused the 4000 pt increase in the Dow? How so?


Well, considering that his policies have been in place since he took office, and when he did, the Dow was 4,000 points below where it is today, I think it is pretty safe to conclude that his policies have accounted for the increase. That's the same logic you conservatives applied to boobiebush when he was in office.
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Re: Is There an Easy Fix for America's Budget Problem?

Postby Jonathan » Wed Feb 10, 2010 12:41 am

Jonathan wrote:You'll have to explain how the person earning more has benefited to a far greater degree.


Sandy wrote:A person earning $1 million has earned far more money than the person earning minimum wage, and thus, has benefitted to a greater degree from what tax support has provided for him to earn the money. That's pretty simple.


Well, no. "Tax support" provides a single infrastructure. The person who earns more is merely making better use of the same infrastructure than the person who earns less. By taking better advantage of taxpayer subsidized school systems, transportation structures, electricity grids, and by doing so for year upon year, some will end up earning far more than those who did not take as good advantage. Further, the person who earns $1million a year will also most likely seek to continue earning more each year and will, therefore, use a significant portion of those earnings hiring others (i.e. job creation), investing in businesses (i.e. job creation) that are managed better than some others, etc...

Sandy wrote:I realize that conservatives think it is grossly unfair for wealthy people to pay anywhere close to their fair share of taxes, simply because they can influence the politics to keep that from happening, but the more money you earn, the more you have benefitted from the infrastructure and the finance laws.


So how much of the federal tax burden should wealthy people bear? As has been stated (and linked to) numerous times before, the top earners pay a percentage of the federal income tax burden that is way out of proportion to their share of all incomes earned in the US.

Jonathan wrote:Where are you getting $3 trillion?


Sandy wrote:That's what the GAO says, when it calculates direct expenditures for the two wars, and other related costs.


Are you sure this figure comes from the GAO? I ask because I've checked several GAO reports and their cost rollups max out at around $1.08 trillion (for 2001-2010). Perhaps I've missed the particular GAO study you're referring to...no doubt you can provide a link.

Jonathan wrote:So President Obama's policies caused the 4000 pt increase in the Dow? How so?


Sandy wrote:Well, considering that his policies have been in place since he took office, and when he did, the Dow was 4,000 points below where it is today, I think it is pretty safe to conclude that his policies have accounted for the increase. That's the same logic you conservatives applied to boobiebush when he was in office.


Interesting. Cum hoc ergo propter hoc? I don't recall arguing that Pres. Bush's policies resulted in the rise of the Dow...especially since, at least before Obama's first year, he presided over the largest increase in domestic spending in memory. Perhaps you have link to my argument on that as well?
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Re: Is There an Easy Fix for America's Budget Problem?

Postby Bruce Gourley » Wed Feb 10, 2010 3:20 pm

One must remember that access to America's public infrastructure in reality is uneven, with the moneyed having greater access, and the poorer lesser access. And this, of course, contributes to the (ever-growing) redistribution of wealth to the rich that has now demoted America to Third World status in terms of our nation's wealth gap.
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Re: Is There an Easy Fix for America's Budget Problem?

Postby Jonathan » Thu Feb 11, 2010 10:57 am

Bruce Gourley wrote:One must remember that access to America's public infrastructure in reality is uneven, with the moneyed having greater access, and the poorer lesser access. And this, of course, contributes to the (ever-growing) redistribution of wealth to the rich that has now demoted America to Third World status in terms of our nation's wealth gap.


Since you identify this (access to America's public infrastructure) as a root cause or contributor to wealth gap, you should probably go into more detail so that we can have a more full and meaningful discussion about it.
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Re: Is There an Easy Fix for America's Budget Problem?

Postby Bruce Gourley » Sat Feb 13, 2010 10:07 am

Jonathan wrote:
Bruce Gourley wrote:One must remember that access to America's public infrastructure in reality is uneven, with the moneyed having greater access, and the poorer lesser access. And this, of course, contributes to the (ever-growing) redistribution of wealth to the rich that has now demoted America to Third World status in terms of our nation's wealth gap.


Since you identify this (access to America's public infrastructure) as a root cause or contributor to wealth gap, you should probably go into more detail so that we can have a more full and meaningful discussion about it.


Have you spent time among America's poverty-stricken masses?
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Re: Is There an Easy Fix for America's Budget Problem?

Postby Jonathan » Sun Feb 14, 2010 12:28 pm

Bruce Gourley wrote:Have you spent time among America's poverty-stricken masses?


I was raised in the center of one of those poverty-stricken areas that is periodically used by politicians seeking to do a road trip to show their compassion.

And for what its worth, I've spent a great deal of time among some poverty-stricken masses outside the US that make anything in the US look wealthy by comparison.

Again, please identify the specific infrastructure details you have in mind.
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Re: Is There an Easy Fix for America's Budget Problem?

Postby Howard V » Sun Feb 14, 2010 2:32 pm

IMO, this would be a good time to actually freeze federal spending, not just slow the rate of increase. After that why not actually decrease federal spending? But to be realistic, a snowball has a better chance in the hot place than either of these ever being done.

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Re: Is There an Easy Fix for America's Budget Problem?

Postby Cathy » Mon Feb 15, 2010 9:59 am

Dave Roberts wrote:Another help for the federal budget would be to extend Social Security taxes to all income, not just to the first $108K. Why should the guy making $1-million a year get exception on $900K of that amount? That should be taken to court as discrimination against those who make less to have to pay on all their earnings.


I generally agree with everything Dave writes. I would take exception to this idea.

It seems to me that taxes should reflect what they are. The SS tax is a retirement and disability insurance. It should remain that. If it has to be subsidized with taxes beyond which a better retirement is purchased for the high income earner it has become an actual tax. Plain and simple. Don't forget that the self employed pay 15% up to the income limit.

The alternative minimum tax should also be eliminated. Why should I lose credit for charitable contributions and deductions for my children? I only have three. Not a quiver full.

If the government needs more money they should just increase the various tax brackets. I very much agree with taxing at a higher rate those in the upper income brackets more than those on the lower end.

I think tax credits are fine. They specifically target needs and encourage things that should generally be encouraged.

My opinion on capital gains has varied over the years. I now think that it is appropriate to have a lower capital gains tax. In many cases you may simply be taxing the difference in replacement costs (as in when you sale a rental property). That does not make a lot of sense. Rental property can become an enforced savings and provide income in your old age. A rental property is only rarely going to result in "real" profits on it's sale. So some adjustment for inflation is appropriate.

So I would repeal the Alternative Minimum Tax. Give back dependent deductions, mortgage interest deductions, and charitable deductions up to say 20% of income (in part by eliminating the AMT). I would continue tax credits for child care and college expenses, health insurance purchases, fuel efficieny (home and auto), hiring new employees etc. Continue a stepwise capital gains tax rate of some sort. If you make over $373,650 in 2010 you will pay 35% tax on the next dollar. Add another bracket or because you have eliminated the AMT increase the upper income bracket taxes (29, 34, 36% instead of 28, 33, 35% and add another bracket over $500,000 (38%). Start brackets low and move them up as needed.

Estate taxes should return to preBush levels. I think if you inherit more than a million you can pay a tax for the privilege. Maybe it should be amortized when a family business is involved.

Add a tax across the board pegged to the national debt. This is the only tax that should be fixed to all income levels. Say 1-2%.
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Re: Is There an Easy Fix for America's Budget Problem?

Postby KeithE » Mon Feb 15, 2010 11:57 am

Cathy wrote:
Dave Roberts wrote:Another help for the federal budget would be to extend Social Security taxes to all income, not just to the first $108K. Why should the guy making $1-million a year get exception on $900K of that amount? That should be taken to court as discrimination against those who make less to have to pay on all their earnings.


I generally agree with everything Dave writes. I would take exception to this idea.

It seems to me that taxes should reflect what they are. The SS tax is a retirement and disability insurance. It should remain that. If it has to be subsidized with taxes beyond which a better retirement is purchased for the high income earner it has become an actual tax. Plain and simple. Don't forget that the self employed pay 15% up to the income limit.

The alternative minimum tax should also be eliminated.

If the government needs more money they should just increase the various tax brackets. I very much agree with taxing at a higher rate those in the upper income brackets more than those on the lower end.
...
I think tax credits are fine. They specifically target needs and encourage things that should generally be encouraged.
...
So I would repeal the Alternative Minimum Tax.
....
Estate taxes should return to preBush levels.
...

Add a tax across the board pegged to the national debt. This is the only tax that should be fixed to all income levels. Say 1-2%.


Well I usually agree with what Cathy says and I agree with most of this - AMT eliminated, Tax credits are good, higher tax rates at upper incomes, and for the interim, return to pre-Bush estate tax rates.

But wrt to SS limits - I would agree with Dave. The amount of SS retirement benefits are nearly porportional to what people make during their careers, not to what they contribute. As such when a high income earner (> than the SS limit of $108K/year) retires his benefits are partially due to the contributions of lower wage earners. I see the argument you make wrt to disability benefits (disability strikes all) but I believe that is small compared to retirement benefits.

Wrt estate taxes - I realize my views are as radical as the Constitution "All Men (and women) are Created Equal" and as radical as capitalism's motive (all should earn a living based on their own effforts), but I'll accept a return to pre-Bush policies. :wink:

Wrt across the board increases to offset national debt - it would require far more than 1-2% to balance the budget (and you never said that) let alone reduce the national debt as this article To Close the Deficit, Federal Income Tax Rates Would Have to Nearly Triple from the Tax Foundation points out.
Federal income tax rates would have to be nearly tripled across the income spectrum if Congress were to close the deficit in fiscal year 2010, according to a new report from the nonpartisan Tax Foundation. Instead of taxing joint filers with rates ranging from 10 percent to 35 percent, tax rates would have to start at 27.2 percent and reach up to 95.2 percent.

2011 is no better, in fact it is probably worse.

Clinton (with Gore's "Reinventing Government" ) had the problem on a good course with surpluses. Bush turned a surplus into a deficit (and his deregulation enabled the banks to do the rest). Obama has not helped.

Truth is we need tax increases (hopefully not tripled) and strong cuts to nearly all programs (DoD, SS, Medicare included) over many years to corral the national debt. Start by getting out of our overseas wars/occupations that are only making matters (hatred of US) worse.

So no - there is no easy fix for America's Budget Problem.
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Re: Is There an Easy Fix for America's Budget Problem?

Postby Dave Roberts » Mon Feb 15, 2010 12:41 pm

Another two places that the federal budget has to be addressed are earmarks and efficiency, particularly in the military.

Earmarks are basically the pork barrel spending that we continue to provide for the pet projects of legislators. Often, a lot of good is done, but the more influential your representative or senator is, the more likely you are to be receiving pork. The fact that there is no system and no sense of broader national priorities to these continues to provide a struggle with mounting national expenditures.

The second is military efficiency. I believe in supporting the military and providing every battlefield soldier with the needed items that are important for the work of soldiering. However, I lived near one of the largest army bases during the Reagan buildup of the 1980's and saw how money was often spent. During that era, the National Guard had to be brought in on weekends to empty ammunition bunkers and fire that ammunition in order to make space for trucks to be unloaded. Also, all on-post theaters were rebuilt to provide movies for the troops despite the fact that there was a large multi-screen cinema off post where far more of the troops were likely to go. We created competition for the private sector. Then over $1-million was spent to purchase a towing system for water skiers on a post lake, and the system had to be imported from Germany. Additionally, all barracks were replaced by single-room dormitory-style accomodations for the troops. Getting the real bang for the buck is needful.
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Re: Is There an Easy Fix for America's Budget Problem?

Postby Bruce Gourley » Sun Feb 21, 2010 7:11 pm

Jonathan wrote:
Bruce Gourley wrote:Have you spent time among America's poverty-stricken masses?


I was raised in the center of one of those poverty-stricken areas that is periodically used by politicians seeking to do a road trip to show their compassion.

And for what its worth, I've spent a great deal of time among some poverty-stricken masses outside the US that make anything in the US look wealthy by comparison.

Again, please identify the specific infrastructure details you have in mind.


If you really were raised among poverty-stricken folk, then you are personally aware of the inequalities of the public education system, the lopsided distribution of tax dollars (federal, state, local) to large corporations, and the unequal access of the poor to government (public) monies (further reinforced by the recent Supreme Court ruling allowing corporations to buy elections).
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Re: Is There an Easy Fix for America's Budget Problem?

Postby Jonathan » Mon Feb 22, 2010 2:20 pm

Bruce Gourley wrote:
Jonathan wrote:
Bruce Gourley wrote:Have you spent time among America's poverty-stricken masses?


I was raised in the center of one of those poverty-stricken areas that is periodically used by politicians seeking to do a road trip to show their compassion.

And for what its worth, I've spent a great deal of time among some poverty-stricken masses outside the US that make anything in the US look wealthy by comparison.

Again, please identify the specific infrastructure details you have in mind.


If you really were raised among poverty-stricken folk,


I'll take the "if you were really" as doubt that I, and a large portion of my kin, are from the more poverty stricken areas of what some call Appalachia (we always called it "the mountains"). I suppose you'll just have to take my word on it.

Bruce Gourley wrote:then you are personally aware of the inequalities of the public education system, the lopsided distribution of tax dollars (federal, state, local) to large corporations, and the unequal access of the poor to government (public) monies (further reinforced by the recent Supreme Court ruling allowing corporations to buy elections).


I'm familiar with settlement schools that started out as part of coal camps that became top performing public schools that, after the state legislature decided to improve inner city schools by adjusting funding formulas, became poorly performing schools (just like the poorly performing - now with greater funding without the increase in student performance - urban schools). I'm also familiar with neighborhood schools that were eliminated by consolidation (i.e. the process where fine smaller but high performing schools are lumped together into much larger schools that don't perform nearly as well) in part because of the corruption in state and local governments.

On the other side, I'm familiar (very personally familiar) with getting caught between coal company management thugs and UMW union thugs...with government support (law enforcement, property value evaluations, etc...) going to the highest bidder (50 years ago, the highest bidder was management...for the last 30 years or so, the highest bidder was union).

What I learned was corruption follows the bucks and that in the information age the best weapon is the ability to follow the bucks. I also learned that infrastructure spending is a distant 2nd to community pride and parental involvement.
"There is a simple way to get corporate money out of politics: get the government out of our lives and economic affairs. If government has no favors to sell, no one will spend money trying to win them." - John Stossel
Jonathan
 
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